These were the 10 best-performing stocks in 2015

I owned every one.

Of course, I also owned every one of the 10 worst-performing stocks. In fact, I owned just about every stock in the US stock market. That’s because I don’t own individual company stocks. I own index funds.

Index investors benefit from low costs and high levels of diversification. Of course, being an index investor does not shield you from losses. And, in the past few weeks, investors have seen– and felt — stock market losses.

What will happen in 2016? I don’t know, and neither does anyone else. In “One Prediction Is Sure: Wall Street Will Be Wrong,” a recent article in The New York Times, reporter Jeff Sommer concluded that “People often pay high fees for investment management that produces scant results. It’s usually wiser, for longer-term investments, to hold them in broadly diversified, low-cost holdings, probably in index funds.”

For the long-term, I agree. Index funds are the way to invest in 2016 and beyond. As for alleviating short-term pain, consider the following:

  1. Chances are, you are not 100% in the stock market. If you have a diversified portfolio, you also own bonds. In the past month, the Vanguard Total Stock Market Index Fund is down, but the Vanguard Total Bond Market Index Fund is up. [Bonds can go down, too, but in most cases, they tend to¬†“cushion the blow.” ]
  2. You haven’t lost anything until you sell. Hopefully, you have a cash reserve and you don’t have to sell right now. If you’re invested for the long-term, you still have time before you will need that money.
  3. Market timing doesn’t work anyway. If you react to the recent downturn by selling, how will you know when to buy? The answer is — you won’t. And that will cost you.

Still feel a need to do something? Get a long-term financial plan, or revise the plan you already have, and make sure you are basing your investments on what your money needs to do for you — not anyone’s market predictions.

I recommend you choose an hourly planner — someone who doesn’t sell any financial products, and can be 100% objective about you, your goals and your investments.

The markets will continue to move up and down, but with the right plan, and the right planner, you’ll feel confident that you’re moving ahead.

I look forward to hearing from you.